SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

ANNUAL REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 31, 1995 0-14562

KEYSTONE MORTGAGE FUND
(Exact name of registrant as specified in its charter.)

CALIFORNIA 95-3786580
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)

11340 W. OLYMPIC BOULEVARD, STE. 300
LOS ANGELES, CALIFORNIA 90064
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (310) 479-4121

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
-------------------------------------
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----

PART I

Item 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

The business of Keystone Mortgage Fund (the "Partnership") was to make
loans secured by deeds of trust on improved commercial and industrial real
properties. As of December 31, 1995, the Partnership had one loan outstanding
in the aggregate principal amount of $1,031,390 as compared to $1,612,000
outstanding at December 31, 1994.

During 1990, the general partners informed the limited partners that all
principal repayments received by the Fund will be distributed to the limited
partners less required reserves for operating expenses. The limited partners
were also informed that the Fund will no longer repurchase units.

EMPLOYEES

The Partnership does not have any employees. Services are performed for
the Partnership by Keystone, for which it receives compensation as set forth in
the Partnership Agreement.

Item 2. PROPERTIES.

The fund occupies space leased by Keystone Mortgage Company, and pays no
rent.

Item 3. LEGAL PROCEEDINGS.

None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

None.

Item 6. FINANCIAL INFORMATION.

SELECTED FINANCIAL DATA

The following table sets forth in tabular form, selected financial data for
the fiscal years 1995, 1994, 1993, 1992, and 1991:

Years Ended December 31st
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------

Revenues $ 496,762 $ 604,547 $ 664,578 $ 699,899 $ 804,287
Net (loss) Income (1,565) 385,502 414,914 516,032 501,300
Trust Deed Notes 1,029,370 1,608,880 4,457,222 4,614,328 4,663,345
Receivable, Net
Total Assets 4,106,537 5,156,127 6,938,939 7,000,427 8,498,100

Net (loss) income
attributable to
limited partners
per limited
partnership unit $ (0.12) $ 28.76 $ 30.95 $ 38.52 $ 37.69

The following table set forth in tabular form, distributions and
withdrawals for the fiscal years 1995, 1994, 1993, 1992, and 1991:

Distributions
and Withdrawals 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------

General Partners None None None $ 1,519 $ 4,321

Limited Partners $1,316,497 $2,166,682 $ 474,877 $2,008,730 $1,283,566

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES:

The portion of Partnership cash flow consisting of principal repayments is
being distributed to the limited partners less required reserves for operating
expenses. Excess cash flow is used to purchase short-term investments and
those investments have maturities consistent with the timing of Partnership
distributions. The Fund will no longer repurchase units. Interest income, net
of Partnership expenses, is distributed to the Partners on a semi-annual basis.
However, the General partners have the right to retain up to 10% of Partnership
cash flow for the purpose of maintaining an adequate liquidity.

The Partnership's liquidity is primarily subject to the schedule of
maturities of Partnership loans and the extent of liquidity can therefore be
projected with reasonable accuracy. During 1995, the Partnership's working
capital decreased $1,254,466. Management believes the Partnership has adequate
working capital and cash reserves to carry on its business.

In 1990 the decision was made to liquidate the Fund by distributing all
proceeds of loan repayments to the Limited Partners as the loans mature
through 1997. The investment in real estate will be held for the production of
income until 1996 or 1997.

On a short-term basis, the Partnership is able to generate adequate amounts
of cash to meet the Partnership's need for cash and contingencies through its
receipt of monthly principal and interest payment on mortgage loans and,
furthermore, as liquidity needs arise the Partnership may change the frequency
of cash distributions to Limited Partners.

FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:

As of December 31, 1995, the Partnership had one loan totaling $1,031,390
as compared to two loans totaling $1,612,000 at December 31, 1994. The
Partnership's investments in real estate totaled $1,102,804 at December 31,
1995 as compared to $1,155,504 at December 31, 1994.

Partnership revenues decreased during 1995 from 1994. The decrease in
revenue in 1995 from the prior year was 17.8% as compared to a 9.0% decrease in
1994 from the prior year and was primarily due to the decrease of interest
income as a result of loan payoffs and distributions of capital to Limited
Partners offset by an increase in revenue from the investment in real estate.

The Partnership's investment in trust deeds, net, decreased $579,510, or
36.0% in 1995 from 1994 and decreased $2,848,342, or 63.9% in 1994 from 1993.
Cash, cash equivalents and short-term investments decreased $442,536, or 18.6%
in 1995 from 1994 and increased $1,144,604 or 93.2% in 1994 as compared to 1993.

General and administrative expenses increased substantially, $274,547, in
1995 from 1994 due to the $270,000 charge for reimbursement of fund expenses
discussed below and decreased 20.9% in 1994 from 1993.

Prior to 1995, Keystone did not pass-through expenses that Keystone
Mortgage Company incurred relating to the operation of the Partnership as
allowed by the Partnership agreement. During 1995 Keystone made a decision to
charge the Partnership for such expenses from the inception of the
Partnership.

Servicing related expenses decreased 34.3% in 1995 from 1994 and
decreased 22.5% in 1994 from 1993. Expenses related to investments in real
estate increased 14.1% in 1995 from 1994 and decreased 6.6% in 1994 from 1993.

The net income per Limited Partnership unit was determined by using a
weighted average of the number of units outstanding during the applicable
fiscal year. The Partnership had a loss of $0.12 per limited unit in 1995 and
the net income per limited partnership unit was $28.76 in 1994 or a 7.1%
decrease from the 1993 amount of $30.95.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Index to the financial statements of Keystone Mortgage Fund is included
in Item 14.

Item 9. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Financial Statements

December 31, 1995 and 1994

(With Independent Auditors' Report Thereon)

INDEPENDENT AUDITORS' REPORT

The General Partners
Keystone Mortgage Fund:

We have audited the accompanying balance sheets of Keystone Mortgage Fund (a
California limited partnership) as of December 31, 1995 and 1994 and the related
statements of operations, partners' capital and cash flows for each of the years
in the three-year period ended December 31, 1995. These financial statements
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Keystone Mortgage Fund as of
December 31, 1995 and 1994 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1995 in
conformity with generally accepted accounting principles.

February 2, 1996

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Balance Sheets

December 31, 1995 and 1994

ASSETS 1995 1994
------------- -------------

Current assets:
Cash and cash equivalents $ 157,848 97,409
Short-term investments (market value of $1,775,183 in 1995
and $2,286,094 in 1994) 1,772,598 2,275,573
Interest receivable on trust deed notes receivable 8,917 18,761
Other receivable 35,000 --
Current portion of trust deed notes receivable (note 4) 11,894 580,508
------------- -------------
Total current assets 1,986,257 2,972,251

Investment in real estate, net (note 5) 1,102,804 1,155,504
Trust deed notes receivable, net (note 4) 1,017,476 1,028,372
------------- -------------
$ 4,106,537 5,156,127
------------- -------------
------------- -------------
LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
Accounts payable and other liabilities $ 429 1,957
Due to general partner (note 3) 270,000 --
------------- -------------
Total current liabilities 270,429 1,957
------------- -------------
Partners' capital:
General partners 23,031 23,047
Limited partners - authorized 20,000 units; outstanding 13,272
units 3,813,077 5,131,123
------------- -------------
3,836,108 5,154,170
------------- -------------
$ 4,106,537 5,156,127
------------- -------------
------------- -------------

See Accompanying Notes To Financial Statements.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Statements of Operations

Years ended December 31, 1995, 1994 and 1993

1995 1994 1993
----------- ----------- ------------

Revenue:
Interest on trust deed notes receivable $ 147,940 346,013 500,913
Investment income 118,183 61,689 39,665
Rental and other revenue from investment in
real estate 230,639 196,845 124,000
----------- ----------- ------------
496,762 604,547 664,578
----------- ----------- ------------
Expenses:
Servicing-related expenses (note 3) 30,657 46,656 60,166
General and administrative expenses (note 3)
299,636 25,089 31,707
Expenses related to investment in real estate
168,034 147,300 157,791
----------- ----------- ------------
498,327 219,045 249,664
----------- ----------- ------------
Net (loss) income $ (1,565) 385,502 414,914
----------- ----------- ------------
----------- ----------- ------------

Weighted average number of limited partnership
units outstanding 13,272 13,272 13,272
----------- ----------- ------------
----------- ----------- ------------
Net (loss) income attributable to limited
partners per limited partnership unit $ (0.12) 28.76 30.95
----------- ----------- ------------
----------- ----------- ------------

See accompanying notes to financial statements.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Statements of Partners' Capital

Years ended December 31, 1995, 1994 and 1993

GENERAL LIMITED
PARTNERS PARTNERS TOTAL
---------- ----------- ----------

Balance at December 31, 1992 $ 15,043 6,980,270 6,995,313

Net income for 1993 4,149 410,765 414,914

Net distributions - $35.78 per limited partnership
unit -- (474,877) (474,877)
---------- ----------- -----------
Balance at December 31, 1993 19,192 6,916,158 6,935,350

Net income for 1994 3,855 381,647 385,502

Net distributions - $163.25 per limited partnership
unit -- (2,166,682) (2,166,682)
---------- ----------- -----------
Balance at December 31, 1994 23,047 5,131,123 5,154,170

Net loss for 1995 (16) (1,549) (1,565)

Net distributions - $99.19 per limited partnership
unit -- (1,316,497) (1,316,497)
---------- ----------- -----------
Balance at December 31, 1995 $ 23,031 3,813,077 3,836,108
---------- ----------- -----------
---------- ----------- -----------

See accompanying notes to financial statements.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Statements of Cash Flows

Years ended December 31, 1995, 1994 and 1993

1995 1994 1993
------------ ------------ ------------

Cash flows from operating activities:
Net (loss) income $ (1,565) 385,502 414,914
Depreciation expense for investment in real estate
52,700 58,000 51,996
Lower of cost or market provision for investment in
real estate -- -- 17,000
Amortization of net loan origination fees (1,100) (5,800) (4,595)
Changes in operating assets and liabilities:
Interest receivable on trust deed notes receivable
9,946 20,695 2,449
Accounts payable and other liabilities (1,528) (1,632) (1,525)
Due to general partner 270,000 -- --
Other (35,000) 379 2,942
------------ ------------ ------------
Net cash provided by operating activities
293,453 457,144 483,181
------------ ------------ ------------
Cash flows from investing activities:
Collection of trust deed notes receivable 580,508 2,854,142 161,701
Purchases of short-term investments (5,419,781) (4,662,573) --
Proceeds from maturities of short-term investments
5,922,756 2,387,000 394,933
------------ ------------ ------------
Net cash provided by investing activities
1,083,483 578,569 556,634
------------ ------------ ------------

Cash flows from financing activities - distributions to
partners (1,316,497) (2,166,682) (474,877)
------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents 60,439 (1,130,969) 564,938

Cash and cash equivalents at beginning of year 97,409 1,228,378 663,440
------------ ------------ ------------
Cash and cash equivalents at end of year $ 157,848 97,409 1,228,378
------------ ------------ ------------
------------ ------------ ------------

See accompanying notes to financial statements.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Notes to Financial Statements

December 31, 1995 and 1994

(1) ORGANIZATION AND PARTNERSHIP AGREEMENT

Keystone Mortgage Fund (the Fund), a California limited partnership, was
formed on April 19, 1984 for the purpose of investing in short to
intermediate-term loans secured by deeds of trust on commercial and
industrial real property.

Profits and losses are generally allocated 1% to the general partners and
99% to the limited partners. To the extent property is obtained in
settlement of a loan obligation, any net gain resulting from the sale of
such property, determined using cost before any previous write-downs, would
be allocated 24% to the general partner and 76% to the limited partners.

Distributions are allocated in the same manner as profits and losses,
except that any distribution of principal repayments of trust deed notes
receivable are made 100% to the limited partners. Effective January 1,
1992, the partnership agreement was amended to allow for distribution to
the partners on a semiannual basis rather than on a quarterly basis.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Fund considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

SHORT-TERM INVESTMENTS

The Fund invests in various bank notes and U.S. government securities with
original maturities between three months and six months. The Fund accounts
for short-term investments under Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," (SFAS 115). In accordance with SFAS 115, the Fund classifies
its investment in debt securities as held to maturity securities and such
short-term investments are stated at cost as the Fund intends to hold these
securities to maturity. At December 31, 1995 and 1994, short-term
investments consisted of U.S. government agency notes with remaining
maturities of less than five months. At December 31, 1995 and 1994, these
securities had an unrealized gain of $2,585 and $10,521, respectively, and
there were no unrealized losses.

USES OF ESTIMATES

Management of the Fund has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from these estimates.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Notes to Financial Statements

TRUST DEED NOTES RECEIVABLE

Trust deed notes receivable are accounted for under the provisions of
Statement of Financial Accounting Standards No. 114 (SFAS 114), "Accounting
by Creditors for Impairment of a Loan," and Statement of Financial
Accounting Standards No. 118 (SFAS 118), "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures." Under
SFAS 114, a loan is impaired when it is "probable" that a creditor will be
unable to collect all amounts due (i.e., both principal and interest)
according to the contractual terms of the loan agreement. The measurement
of impairment may be based on (1) the present value of the expected future
cash flows of the impaired loan discounted at the loan's original effective
interest rate, (2) the observable market price of the impaired loan or (3)
the fair value of the collateral of a collateral-dependent loan. The
amount by which the recorded investment of the loan exceeds the measure of
the impaired loan is recognized by recording a valuation allowance with a
corresponding charge to provision for loan losses.

ALLOWANCE FOR LOSSES ON TRUST DEED NOTES RECEIVABLE

An analysis of the collectibility of each trust deed note receivable is
performed by management on a regular basis. Management considers such
factors as current economic conditions, the borrower's ability to repay and
repayment performance, probability of foreclosure and estimated collateral
values in determining any allowance need. Management has determined that
no allowance is necessary as of December 31, 1995 and 1994.

INVESTMENT IN REAL ESTATE

The investment in real estate was acquired in settlement of loans. It was
initially recorded at estimated fair value less selling costs. At the time
of foreclosure, any excess of cost over the estimated net fair value was
accounted for as a loan charge-off and deducted from the allowance for loan
losses. Subsequent to foreclosure, such real estate has been carried at
the lower of cost or net realizable value as the fund is holding the real
estate for the production of income. Depreciation is recorded based on the
straight-line method and an estimated life of 20 years.

ORIGINATION FEES

Fees from the origination of trust deed notes receivable and certain direct
origination costs are recognized over the contractual life of such trust
deed notes receivable using methods which generally produce a level-yield
on the unpaid loan balance.

INTEREST INCOME ON TRUST DEED NOTES RECEIVABLE

Interest income on trust deed notes receivable is accrued as it is earned.
Interest receivable which is deemed uncollectible is excluded from interest
income. Trust deed notes receivable are placed on nonaccrual status after
being delinquent 90 days. There are no notes on nonaccrual status at
December 31, 1995 and 1994.

INCOME TAXES

No provision has been made for income taxes in the accompanying financial
statements, inasmuch as the liability for taxes arising from the
transactions of the Fund are the responsibility of the partners.

INCOME AND DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT

Net income and distributions per limited partnership unit are based on the
net income and distributions attributable to the limited partners and the
weighted average number of limited partnership units outstanding during
each period.

RECLASSIFICATIONS

Certain 1994 and 1993 balances have been reclassified to be consistent with
1995 presentation.

(3) RELATED PARTY TRANSACTIONS

The general partners of the Fund are Keystone Mortgage Company (managing
general partner), John P. Sullivan and Christopher E. Turner.
Messrs. Sullivan and Turner are officers/directors of Keystone Mortgage
Company. As compensation for servicing loans, the Fund pays an annual fee
of 1/2 of 1% of the average outstanding loan principal balances, computed
as of the end of each month, to Keystone Mortgage Company. Servicing-
related expenses include approximately $7,000 in 1995, $16,000 in 1994 and
$23,000 in 1993 of servicing fees paid to Keystone Mortgage Company.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Notes to Financial Statements, Continued

Prior to 1995, Keystone Mortgage Company did not pass-thru to the Fund
expenses that Keystone Mortgage Company incurred related to operation of
the Fund as allowed by the Fund's partnership agreement. During 1995,
Keystone Mortgage Company made a decision to charge the Fund for
reimbursement of such expenses incurred by Keystone Mortgage Company from
inception of the Fund and, accordingly, requested payment from the Fund.
The expense reimbursement totals $270,000 and is included in general and
administrative expenses for the year ended December 31, 1995 in the
accompanying statement of operations and in due to general partner in the
accompanying balance sheet as of December 31, 1995.

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Notes to Financial Statements, Continued

(4) TRUST DEED NOTES RECEIVABLE

Trust deed notes receivable consist of the following at December 31:

MONTHLY
PAYMENT,
INCLUDING
INTEREST 1995 1994
---------- ---------- ----------

Second trust deed on an office/warehouse/light
manufacturing facility located in Los Angeles,
California, interest rate of 10%, repaid during 1995
$ 6,913 -- 568,716

First trust deed on an office/warehouse/light industrial
building located in Hawthorne, California, interest
rate of 10.375%, due November 1, 1997
9,965 1,031,390 1,043,284
---------- ---------- ----------
----------
1,031,390 1,612,000
Less net deferred loan origination fees 2,020 3,120
Less current portion 11,894 580,508
---------- ----------

$ 1,017,476 1,028,372
---------- ----------
---------- ----------

(5) INVESTMENT IN REAL ESTATE

Investment in real estate consists of eight industrial condominium units
located in Arizona. The investment is composed of the following at
December 31:

1995 1994
------------ ------------

Land $ 260,000 260,000
Buildings and improvements 1,040,000 1,040,000
------------ ------------
1,300,000 1,300,000
Less:
Accumulated depreciation 162,696 109,996
Net realizable value allowance 34,500 34,500
------------ ------------
$1,102,804 1,155,504
------------ ------------
------------ ------------

KEYSTONE MORTGAGE FUND
(A California Limited Partnership)

Notes to Financial Statements, Continued

Future minimum rental payments to be received under operating leases are as
follows:

1996 $ 177,335
1997 109,063
1998 18,886
----------
$ 305,284
----------
----------

(6) RECONCILIATION OF NET INCOME BETWEEN FINANCIAL
STATEMENTS AND PARTNERSHIP TAX RETURN (UNAUDITED)

The difference between the net income for financial reporting purposes and
the net income for Federal income tax purposes per the partnership tax
return is summarized as follows:

1995 1994 1993
--------- --------- ---------

Net (loss) income for financial reporting purposes $ (1,565) 385,502 414,914
Interest revenue on mortgage loans recognized for financial
reporting - previously recognized for tax purposes

(3,118) (5,800) (4,595)

Difference between book and tax depreciation for
investment in real estate 18,980 18,823 20,359
--------- --------- ---------
Net income for Federal income tax purposes $ 14,297 398,525 430,678
--------- --------- ---------
--------- --------- ---------

Item 9. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVES OFFICERS.

The affairs of the Partnership are managed by the Managing General Partner,
Keystone Mortgage Company, and the Individual General Partners, John P. Sullivan
and Christopher E. Turner.

KEYSTONE MORTGAGE COMPANY

Keystone Mortgage Company, A California Corporation ("Keystone"), has been
engaged in the mortgage banking business since 1957. Keystone is a member of
the Mortgage Bankers Association of America, the California Mortgage Bankers
Association and the Southern California Mortgage Bankers Association. Keystone
originates and services real estate loans on behalf of more than ten national
life insurance companies, a savings bank, a commercial bank and various trust
funds. In addition, Keystone and certain officers have been, and continue to be
joint venture partners in the development of real estate with several of the
life insurance companies for which Keystone acts as a mortgage loan
correspondent. Keystone currently services a portfolio of loans in principal
amount in

excess of $350,000,000 and has originated loans in original principal amount in
excess of $1,000,000,000 since its inception in 1957. Other activities of
Keystone include property management and the sale and leasing real estate.
Keystone is a licensed real estate broker in the State of California. Keystone
Mortgage Company is also the Managing General Partner of Keystone Mortgage Fund
II, a California limited partnership.

DIRECTORS AND OFFICERS

The directors and executive officers of Keystone Mortgage Company are:

DATE OF
NAME AGE TITLE APPT.
- ---- --- ----- -------

John P. Sullivan 70 President and Chairman of the Board 1957
Christopher E. Turner 62 Executive Vice President and Director 1972
Ron N. Buchanan 49 Vice President 1978
Sandra B. Coopersmith 57 Vice President 1975
Melinda F. Love 41 Vice President 1984
Norma Foster 56 Vice President 1986
John G. Sullivan 34 Vice President 1992
Mark G. Sullivan 39 Secretary 1984
Susan Kao 34 Chief Financial Officer 1990

JOHN P. SULLIVAN has been in mortgage banking in California since 1953, and
since 1957, he has served as president of Keystone. He was a founding member of
American Real Estate Association, and has been a director of the Southern
California Mortgage Bankers Association, a member of the International Council
of Shopping Centers, and a member of the Executive Committee of the Southern
California Economic and Job Development Council of the Los Angeles Chamber of
Commerce. He has served as a director of a savings and loan association, a
lecturer at Stanford University and the School of Mortgage Banking at Michigan
State, and a lecturer on the subject of shopping center financing at the
University of California at Los Angeles.

CHRISTOPHER E. TURNER has been active in mortgage banking in California
since 1963, and since 1972, he has served as executive vice president of
Keystone. Prior to joining Keystone, Mr. Turner was employed at the University
of California at Los Angeles in the real estate research program where he worked
for three years as a graduate research economist after receiving his MBA degree.
He lectured on the subject of real estate appraising and investments at the
University of Southern California from 1967 to 1974 and lectured on the subject
of industrial real estate at the University of California at Los Angeles in 1974
and 1975 in the real estate extension program. Mr. Turner has also lectured at
the Schools of Mortgage Banking at Stanford University and Houston University.

He is a member of the American Industrial Real Estate Association and the Urban
Land Institute, the National Mortgage Bankers Association and the American
Society of Real Estate Counselors. He has also served on the research committee
of the National Mortgage Bankers Association and on the Board of Governors of
the American Industrial Real Estate Association.

RON N. BUCHANAN joined Keystone in 1972 and currently serves as vice
president. Prior to his association with Keystone, he was employed by Security
Pacific National Bank in the construction loan department. He is an active
member in the American Industrial Real Estate Association and has served on its
Board of Directors. Mr. Buchanan has been a lecturer in real estate finance in
the University of California at Los Angeles extension program since 1976.

SANDRA B. COOPERSMITH has been with Keystone since 1967. Her present
responsibilities include management of the loan closing and loan servicing
departments. For a year prior to her employment at Keystone, she was the
corporate treasurer of a Los Angeles-based mortgage banking company. She has
also been a manager of the real estate division of a Los Angeles-based financial
institution, overseeing field inspectors, loan officers, credit checkers and
loan processors. She is a past president and life member of the Los Angeles
Escrow Association.

MELINDA F. LOVE has been with Keystone since 1978 and was appointed vice
president in 1984. Prior to joining Keystone, she was a mortgage analyst in the
real estate department of Farmers New World Life Insurance Company. She is an
active member in the American Industrial Real Estate Association, of which she
has served as affiliate representative on the Board of Directors; she is also a
member of the Southern California Mortgage Bankers Association of which she was
the 1988 co-chairman of the Income Property Roundtable Committee, the 1989
assistant treasurer, 1990 treasurer and serves as a Director for 1991.

NORMA FOSTER joined Keystone in 1980 and was appointed vice president in
late 1986. Ms. Foster currently serves as Business Manager for Keystone and in
addition to her administrative and management responsibilities handles limited
partnership accounting. Since 1962, Ms. Foster has been involved in
international banking, accounting and corporate administration. Ms. Foster
holds an MBA in management from University of California at Los Angeles.

JOHN G. SULLIVAN has been with Keystone since 1984 and was appointed
assistant vice president in 1987. He is an active member of the International
Council of Shopping Centers, American Industrial Real Estate Association, and
the Ventura county Economic Development Association. He holds a bachelors
degree in business economics from the University of California at Santa Barbara.
John G. Sullivan is not related to either John

P. Sullivan, an Individual General Partner, or Mark G. Sullivan.

MARK G. SULLIVAN has been the secretary of Keystone since early 1984. Mr.
Sullivan has experience in the analysis and development of commercial real
estate projects. He holds a bachelor degree in science and geology from the
University of California at Santa Barbara. He is the son of John P. Sullivan.

SUSAN KAO joined Keystone in 1990 as the chief financial officer. She is a
certified public accountant with a broad range of industry experience which
include residential and commercial real state, leisure time organizations -
restaurants and hotels and entertainment. In addition to her experiences in
public accounting, she has had extensive training in the review of corporate
operation and internal controls. Ms. Kao holds a bachelors of science in
accounting from Loyola Marymount University.

No director of executive officer of Keystone, within the preceding five
year period, has filed a petition under Federal Bankruptcy laws, or has been
convicted in a criminal proceeding or is named subject of a pending criminal
proceeding.

Item 11. EXECUTIVE COMPENSATION.

Compensation for services rendered by the General Partners on behalf of the
Partnership for the fiscal years 1993, 1994 and 1995 is as follows:

Name of Individual Compensation Paid or Accrued Cash
or Group for Service Rendered in 1993 1994 1995 Bonus
- -------------------------------------------------------------------------------------------------

Keystone Mortgage Co. Loan Servicing Fees $23,000 $16,000 $7,000 None
John P. Sullivan Management Fees None None None None
Christopher E. Turner Management Fees None None None None

In addition, the General Partners of the Partnership are entitled to
receive certain cash distributions and allocations of taxable income or loss.
No cash distributions and allocations were made for fiscal years 1993, 1994
and 1995.

As previously discussed, prior to 1995, Keystone did not pass expenses
that Keystone Mortgate Company incurred relating to the operation of the
Partnership as allowed by the Partnership agreement. During 1995 Keystone
made a decision to charge the Partnership for such expenses from the
inception of the Partnership. The expense reimbursement totals $270,000 and
such amount was recorded as general and administrative expense during 1995.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

No one holder of Units owns more than five percent of the total Units.

(b) SECURITY OWNERSHIP OF MANAGEMENT.

The Individual General Partners are also officers or directors of.

A majority in interest of the Limited Partners may at any time, by
vote or written consent, remove any General Partner, with or without
cause. Upon such removal, the General Partner so removed shall have
no further liability as a General Partner of the Partnership and the
Partnership Agreement shall be amended to state that the General
Partner so removed is no longer a General Partner of the Partnership.
After said removal, the interest of the General Partner in the
Partnership shall automatically convert to a limited partnership
interest and the General Partner shall have, with respect thereto, all
rights and powers of a Limited Partner.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Partnership is strictly prohibited from making any loan or
participating in any other transaction involving the General Partners, or any of
them, their affiliates, or any officer or director or employee of any those
entities under any circumstances.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.

(a) (1) The following financial statements of Keystone Mortgage Fund are
in Item 8:

Report of Independent Auditors. . . . . . . . . . . . . . . . . 8

Balance Sheets as of December 31, 1995 and 1994 . . . . . . . . 9

Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993. . . . . . . . . . . . . . 10

Statements of Partners' Capital for the
Years Ended December 31, 1995, 1994 and 1993 . . . . . . . 11

Statements of Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993 . . . . . . . . . . 12

Notes to Financial Statements . . . . . . . . . . . . . . . . . 13

(a) Schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission
are not required under the related instruction or are
inapplicable, and therefore have been omitted.

(b) No reports on Form 8-K were filed by the registrant during the
last quarter of the period covered by this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Keystone Mortgage Fund

Date: March , 1996 /s/ JOHN P. SULLIVAN
-------------------------------
Keystone Mortgage Company
By: John P. Sullivan, President

Date: March , 1996 /s/ JOHN P. SULLIVAN
-------------------------------
John P. Sullivan
General Partner

Date: March , 1996 /s/ CHRISTOPHER E. TURNER
-------------------------------
Christopher E. Turner
General Partner